Last month’s vote to leave the European Union sent shockwaves through the business sector.
Among the many questions being asked in the wake of the vote (other than “why is Scotland being dragged out against the overwhelming will of her people?”) is what the implications are for employers and where the future lies for employment law?
As employers, much of the practices we now follow have been shaped, and in some cases thrust upon us, by Europe.
While we are not in a position to say with any certainty precisely what is going to happen in terms of the UK’s relationship with the EU or indeed Scotland’s relationship with the EU and the UK, there are some predictions which can be made in relation to the employment law landscape.
The immediate impact
The referendum result does not have an immediate impact on employment law.
As matters stand the UK remains a member of the EU. It is anticipated that the government’s negotiations to exit the EU and agree new trading relationship with (what will become) a 27 member organisation will take at least two years. For the time being the status quo remains.
In any case, while many of our employment laws have stemmed from and been formed in compliance with various EU Directives, those laws have been implemented by way of UK Regulations. As such, even when the UK exits the EU and is no longer bound to comply with EU Directives and European Court decisions, our domestic employment laws will not be automatically overturned, they will stand unless and until they are repealed by an act of parliament.
What is unlikely to change?
While we may see some movement in employment law in the areas outlined below, it appears unlikely that there will be a significant overhaul for a number of reasons:
• It may be built into the conditions of some of the trade agreements struck between the UK and EU countries that certain employment rights must be maintained in order to ensure that the UK cannot effectively undercut EU businesses by employing workers on cheaper and less onerous terms.
• The desire for change to employment law will depend on the political landscape and the government in power at the point of exit from the EU.
• Many of the employment rights which originally stem from EU law are now tied up in existing contracts of employment and renegotiating those terms and conditions may be difficult and / or undesirable for employers.
• Many UK employment law rights do not stem from EU law in any case.
• In some cases, although employment rights have originated in EU law, the UK has actually “gold plated” those rights by making them more extensive than the EU requirement.
On this basis, we can say with relative confidence that the following employment rights are unlikely to be affected by the exit from the EU:
• National minimum wage, unlawful deductions from wages and unfair dismissal law which do not stem from European law.
• Discrimination law – the UK had already legislated to prevent discrimination on the grounds of sex, race and disability before this was ever a requirement of EU law.
• TUPE – aside from the potential amendments outlined below, TUPE is expected to remain in place. The TUPE framework has become an accepted part of business transfers, with the UK going beyond the requirements of the EU Directive by introducing service provision change terms in 2006.
• Holiday entitlement – again the UK has gone beyond the four week paid holiday requirement under the EU Working Time Directive by allowing for 5.6 weeks paid holiday.
• Family friendly rights – these rights have been driven domestically within the UK with maternity leave of 52 weeks, shared parental leave and flexible working rights going well beyond the requirements of the EU Directive.
What might change?
That said, there are certain aspects of employment law which have been dictated by European law which have proved unpopular with employers and which may therefore be most likely to change once the UK exits the EU.
Examples include:
• Agency Workers Regulations which provide for equal rights for agency workers after 12 weeks of work. These Regulations have proved very unpopular and are not widely supported by the unions.
• The TUPE Regulations may be tweaked to address the bug-bears of employers, which would likely result in the information and consultation requirements becoming less onerous and it becoming easier for employers to harmonise terms and conditions post transfer.
• Collective redundancy consultation requirements may be amended / relaxed.
• The 48 hour limit on working time, which is widely opted out of in the UK in any case, would likely be scrapped.
• Recent case authority requiring employers to include commission and certain overtime payments in holiday pay (in compliance with EU law) may be reviewed by parliament to allow a return to a situation where holiday pay will be made up of basic salary only.
• A cap may be introduced on the amount of compensation which employment tribunals can award in discrimination cases.
In conclusion the immediate impact of Brexit on employment law is minimal. The longer term impact remains to be seen.
There are certain areas of employment law which are likely to be amended or overturned post Brexit but we do not, at this time, predict a far reaching overhaul of employment law as we know it.
As ever, my employment law team are ready to help any business owner who needs further guidance.
